Listen, Liberal: or, what ever happened to the party of the people?

by Thomas Frank

Toil hopelessly or go to prison: that is life at the bottom, thanks to Bill Clinton.

To judge by what he actually accomplished, Bill Clinton was not the lesser of two evils, as people on the left always say about Democrats at election time; he was the greater of the two. What he did as president was beyond the reach of even the most diabolical Republican.

Just as Ronald Reagan’s Republicans claimed to be able to bring down the federal deficit by cutting taxes, so Clinton’s Democratic heirs were able to pass off virtually any favor to the rich as an act of concern for the poor.

Let us be clear about the political views Florida was expounding here. The problem with, say, George W. Bush’s administration was not that it favored the rich; it was that it favored the wrong rich—the “old-economy” rich.

Obama’s $800 billion stimulus program, introduced in Congress six days after his inauguration, was said to be so sweeping it constituted nothing less than a “New New Deal,” to quote the title of a book by Time magazine’s Michael Grunwald.

It has now been seven years since the Day Change Came, and we can indeed see what happened. On the most urgent issue facing the nation—what to do about the banks—the intelligence quotient of the president’s team turned out to matter almost not at all.

What the sprawling stimulus measure did not include was the obvious thing, the most effective thing, the thing Americans of all ages remember that Franklin Roosevelt did—direct federal job-creation in the WPA manner.

When the president did take a bold stand, it sometimes came at the expense of those same working Americans. I am referring to the 2015 debate over the Trans-Pacific Partnership treaty, which aimed to extend the NAFTA pattern to many countries on the Pacific Rim. Predictably, the phrase “no-brainer” made its appearance again, most notably from the pencil of an economist who thought the question before us was not the treaty’s particulars but whether trade was a good thing. Obama himself, having spun a full one-eighty since his days criticizing NAFTA, accused the treaty’s opponents of stupidly wanting to “pull up the drawbridge and build a moat around ourselves.”

Obama even chose Erskine Bowles, the man who had been Clinton’s emissary to Newt Gingrich in the secret negotiations over privatizing Social Security.

On the contrary. It was fully within Obama’s power to react to the financial crisis in a more aggressive and appropriate way: laws were in place, there was ample precedent, he wasn’t forced to pick the men whom Democrat Senator Byron Dorgan plaintively called “the wrong people” for his economic team.27 It wasn’t the Republicans who made Obama choose Tim Geithner to run the bailouts or Attorney General Eric Holder to (not) prosecute dishonest bankers or Ben Bernanke to serve another term at the Fed.

Why did Team Obama choose to go this route? One explanation is suggested by the infamous remarks of Obamacare consultant Jonathan Gruber, an MIT economist who was videotaped telling an academic conference in 2013 that the law was deliberately “written in a tortured way” with a “lack of transparency” that was meant to confuse evaluators and thus get it past the clueless and bewildered public. (Gruber’s exact phrase was “the stupidity of the American voter.”2)

on the innovation cult in Cambridge, Massachusetts,

Perhaps they were just showing their enthusiasm for Raimondo’s economic plan, which is to enthrone “innovation” as her state’s guiding purpose.

suspiciously vague.

As of 2010, some 152,000 students lived in the city of Boston, making up 16.5 percent of the total population.

Boston’s metro area encompasses eighty-five private colleges and universities, the greatest concentration of higher-ed institutions in the country—probably in the world.

Another prototype: the Massachusetts Institute of Technology, situated in Cambridge, is where began our modern conception of the university as an incubator for business enterprises.

To think about it slightly more critically, Boston is the headquarters for two industries that are steadily bankrupting middle America: big learning and big medicine, both of them imposing costs that everyone else is basically required to pay and yet which increase at a pace far more rapid than wages or inflation.

He watches a 2012 Obama-Romney debate and thinks of all the people he knows who would be considered part of Romney’s lazy 47 percent—including his own mother, a factory worker during World War II who was now “draining our country dry through the twin Ponzi schemes of Social Security and Medicare.”

The keystone of the inno-structure is the university; indeed, some people in this city of universities have come to believe that the starting-up of companies and the launching of professional careers is the very purpose of higher education.

At Harvard, where I met innovation guru Clayton Christensen ambling across a parking lot, the dream of being the next Mark Zuckerberg or Bill Gates is almost palpable. As well as the usual incubators and accelerators, the school boasts a $100 million venture capital fund that is focused on commercializing the ideas of former students.

To put it bluntly, it is not clear that cheering for innovation in the bombastic way we see in the blue states actually improves the economic well-being of average citizens.

For example, the last fifteen years have been a golden age of financial and software innovation, but they have been feeble in terms of GDP growth. In ideological terms, however, innovation definitely works: as a way of excusing soaring inequality and explaining the exalted status of the rich, it is the best we’ve got.

On still other occasions, favoring inno has meant bulldozing the people in its path—for instance, the taxi drivers whose livelihoods are being usurped by ridesharing apps like Uber. When these workers staged a variety of protests in the Boston area, Patrick intervened decisively on the side of the distant software company; apparently convenience for the people who ride in taxis was more important than good pay for people who drive those taxis. It probably didn’t hurt that Uber had hired a former Patrick aide as a lobbyist, but the real point was, of course, innovation: Uber was the future, the taxi drivers were the past, and the path for Massachusetts was obvious.

Deval Patrick

Travis Kalanick,

Eric Schmidt,

Mitt Romney—

The state’s income tax, to mention a particularly egregious example, is a flat tax, with the same rate paid by rich and poor alike.

Ordinarily, this is the point where a Democrat would start laying out his plans to reverse this disaster—a public works program, an end to the exodus of manufacturing, and so on. But not this Democrat. Instead, using the following words, he told those working people that nothing could be done for them: “So yes, the world has changed. The competition for jobs is real.” What has happened to working people was simply “real.” It was reality. What you do about reality is you get used to it.

I remember listening to him talk about “innovation,” and just tuning it out. At the time I thought of innovation as a cliché, a generic faith in progress. But Obama was serious about this stuff. Encouraging innovation was to be his great economic vision, his liberal utopia.

Then there’s the spying. In his important 2013 book, Who Owns the Future?, the tech writer Jaron Lanier describes the emerging Internet giants of our time as “third-party spy service[s].” Many of them, he argues, make their profits via “the creation of ultrasecret mega-dossiers about what others are doing”;8 everything else they offer—retail sales, connecting with friends, searching the Internet—is secondary.

Schmidt’s single most famous statement, delivered to a CNBC talker in 2009, is a direct rationalization of surveillance-for-profit: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”

In truth, however, nothing is inevitable and very little is new. And tech is no more the root of the problem than are trade or globalization. Many of our most vaunted innovations are simply methods—electronic or otherwise—of pulling off some age-old profit-maximizing maneuver by new and unregulated means. Sometimes they are designed to accomplish things that would be regulated or even illegal under other circumstances, or else they are designed to alter relationships of economic power in some ingenious way—to strip away this or that protection from workers or copyright holders, for example.

The circumvention strategy isn’t restricted to software innovations, either. One of the great attractions of credit default swaps—a big financial innovation of the last decade—is that they were completely unregulated.

Everyone’s favorite is something called TaskRabbit, which allows people to farm out odd jobs to random day laborers, whom the app encourages you to imagine as cute, harmless bunnies.

Indeed, when a company’s business strategy consists of some novel way to get around safety regulations, or antitrust statutes, or basic labor law, it is the government’s duty to do something about it.

This is atavism, not innovation. It has not reversed the trends of the last thirty years; it has accelerated them. And if we keep going in this direction, it will one day reduce all of us to day laborers, standing around like the guys outside the local hardware store, hoping for work.

Again Americans are outraged at the way the middle class is falling to pieces and at the greed of the people on top. The best-seller lists are once again filled with books about inequality. Today Americans are working even harder for even less than when Bill Clinton made “working harder for less” his campaign catchphrase. The way Hillary Clinton—the way any Democrat—will play such a situation is extremely easy to guess.

As a presidential candidate, she opposes Obama’s Trans-Pacific Partnership treaty, as do I; as secretary of state, however, she helped negotiate it. As a presidential candidate in 2008, she claimed to oppose NAFTA, the first great triumph of the (Bill) Clinton administration; not only had she supported it earlier, but as a U.S. senator, she had voted for numerous Bush administration free-trade treaties.

As a presidential candidate in 2008, Hillary liked to identify herself with working-class middle Americans; as a lawyer in Arkansas in the Eighties, however, she was a proud member of the board of directors of Wal-Mart, the retailer that has acted on middle America like a neutron bomb.

On the increasingly fraught matter of the sharing economy—the battle of Silicon Valley and Uber versus the workers of the world—Hillary actually tried to have it both ways in the same speech in July 2015.

As everyone would soon learn with the help of a National Security Agency contractor named Edward Snowden, to understand the Internet in terms of this set-piece battle of free speech versus censorship was to miss the point entirely. There’s something else the Internet makes it easy for governments to do—something called “mass surveillance,” and, we later learned, the very government Hillary Clinton served was the one doing it. Not some despot in Damascus. Not some terrorist in Tripoli. Her government.

The key to development was not doing something to limit the grasp of Western banks, in other words; it was extending Western banking methods to encompass every last individual on earth.25

These are fine, sterling sentiments, but they suffer from one big problem: microlending doesn’t work. As strategies for ending poverty go, microlending appears to be among the worst that has ever been tried, just one step up from doing nothing to help the poor at all.

The terrible implication of the facts he has uncovered is that what microlending achieves is the opposite of development. Even Communism, with its Five Year Plans, worked better than this strategy does, as Bateman shows in a tragic look at microloan-saturated Bosnia.28

What drives this market are the buyers. Like Wal-Mart and Goldman Sachs “partnering” with the State Department, what these virtue-consumers are doing is purchasing liberalism offsets, an ideological version of the carbon offsets that are sometimes bought by polluters in order to compensate for the smog they churn out.

For poor and working-class American women, the floor was pulled up and hauled off to the landfill some twenty years ago. There is no State Department somewhere to pay for their cellphones or pick up their daycare expenses. And one of the people who helped to work this deed was the very woman I watched present herself as the champion of the world’s downtrodden femininity.

Were you to draw a Venn diagram of the three groups whose interaction I have tried to describe in this book—Democrats, meritocrats, and plutocrats—the space where they intersect would be an island seven miles off the coast of Massachusetts called Martha’s Vineyard.

In a scholarly paper about social class published in 1946, the sociologist C. Wright Mills found that “Big Business and Executives” in Decatur earned a little more than two times as much as the town’s “Wage Workers” did.7 In 2014, the CEO of Archer Daniels Midland, a company that dominates Decatur today, earned an estimated 261 times as much as did average wage workers. The CEO of Caterpillar, the focus of one of the Decatur “war zone” strikes I described in Chapter Three, made 486 times as much.8 Caterpillar’s share price, meanwhile, is roughly ten times what it was at the time of the strike.